Finnair PLC said Friday that first-quarter net loss narrowed by 40 percent to (EURO)20.4 million ($27 million) thanks to strong growth in revenue, mainly in Europe.
Despite heavy competition from budget airlines, the Finnish national carrier reported an 11 percent growth in net sales to (EURO)592 million, from 534 million a year earlier. Net loss in January through March last year was (EURO)34 million.
CEO Mika Vehvilainen said the quarter was better than anticipated, helped by a successful pricing campaign and increased efficiency. But he cautioned that Finnair would continue to be hit by high fuel costs and that its performance would be "significantly loss-making" in the first half of the year with improved prospects in the second half.
Its share price closed down unchanged at (EURO)2.20 ($2.91) on the Helsinki Stock Exchange.
Finnair said it expects passenger traffic to increase by about 5 percent, with growth mainly on Asian routes.
"While we can be satisfied with the growth of our business in the first quarter, our operating result was still negative at -25.0 million euros," Vehvilainen said. "This means that we must achieve significant improvements in profitability ... and to return to profitability as quickly as possible through a strategy focused on Asian traffic (and) leadership in the Nordic region and partnerships."
Describing the airlines industry as "undergoing structural reform ... in intense competition," he said Finnair's goal was "to take advantage of the opportunities presented by the changes in its industry and strengthen its position in traffic between Europe and Asia."
Finnair, which is in talks with several airlines to create a joint venture in the Nordic region, said it will continue structural reform and expects a cost-cutting program of (EURO)140 million to be achieved by the end of the year, two years ahead of target.
The airline is 56 percent government-owned and employs some 7,200 people, down from 7,500 a year earlier. In 2011, more than 8 million passengers flew Finnair, up from 7.1 million a year earlier.